Tuesday, February 13, 2007

Calls of Note Part 3

- Jefferies is positive on Smith Micro (NASDAQ:SMSI) saying that despite a modest launch, they believe increased marketing spend by Verizon has helped to drive a recent pickup in QL Music download activity. While recent acquisitions will likely be dilutive near term, strong organic performance should help to offset some of these concerns.

Specifically, they believe Verizon's recent marketing push at the Grammys and advertising in Rolling Stone magazine have helped drive QL Music sales. Firm estimates QL Music ASPs in the $4-7 range with an above average 95%+ gross margin.

Jeffco is raising revenue estimates to reflect an improved outlook for the QuickLink suite. 2007 revenue estimate moves up slightly to $74mm, up from $72mm previously. However, their pfEPS estimate remains unchanged at 60c given an added 4mm shares from its recent secondary offering. Without guidance, their estimates do not yet include the impact of its Insignia and Ecutel acquisitions.